Zimbabwe Suspends 15-percent Diamond Sales Tax

Reuters reported that Zimbabwe has axed a 15-percent tax on diamond sales, at least temporarily. The move was brought about by lower production as well as “low international gem prices,” according to the country’s finance minister and central bank governor.

As quoted in the market news:

The southern African country last October ordered diamond mining companies to deduct a 15% tax from gross sales of diamonds, backdated to April of the same year.

In a letter to the IMF dated April 17, Finance Minister Patrick Chinamasa and Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya said the decision to suspend the tax was part of efforts to improve the viability of the mining industry.

Diamond mining companies last year criticised the levy, saying it would choke a sector hit by weaker diamond prices.

Explaining Zimbabwe’s place in the diamond industry, the news outlet states:

Zimbabwe, one of the world’s top diamond-producing countries, is believed to hold 25% of the world’s reserves of opencast extractable diamonds, with the eastern Marange fields its major diamond source.

The government owns half the shares in all the mines in Marange, which produces alluvial diamonds that are of a lower quality than the gems mined at Rio Tinto’s Murowa mine in south central Zimbabwe.

Murowa produced 344 000 ct in 2014 but production figures from mining companies operating in Marange area, which produced 14 million carats in 2013, are not yet available.

Mining generates half of Zimbabwe’s export income but the sector has been hit by low mineral prices and a 15% tax levied on unrefined platinum in January.

Click here to read the full Reuters report.